Regulatory Alerts2020-03-31 | Finance Leasing Act Directions No. 2 of 2020Amendments to Directions on Liquid Assets
The Central Bank of Sri Lanka has amended the Finance Leasing Liquid Assets Direction to require Specialized Leasing Companies to maintain daily minimum liquid assets equal to at least five percent of their total liabilities and off-balance sheet items. The calculation explicitly excludes shareholder liabilities, securitizations, and long-term borrowings exceeding one year. These amended requirements will remain effective for six months to support financial stability during the COVID-19 pandemic.
CENTRAL BANK OF SRI LANKA 31 March 2020 FINANCE LEASING ACT DIRECTIONS No. 2 of 2020
AMENDMENTS TO DIRECTIONS ON LIQUID ASSETS
In terms of the powers conferred by section 34 of the Finance Leasing Act, No.56 of 2000, the Director of the Department of Supervision of Non-Bank Financial Institutions issues the following amendments to the Finance Leasing (Liquid Assets) Direction No.4 of 2012 issued for Specialized Leasing Companies (SLCs).
Accordingly, the section 1 of the Finance Leasing (Liquid Assets) Direction No. 4 of 2012 shall be replaced with the following.
- Every SLC shall maintain minimum liquid assets at the close of the business on any day of an amount not less than 5 per cent of the total liabilities and off balance sheet items excluding liabilities to the shareholders, securitizations and asset backed long term (over one year) borrowings.
- These directions shall be effective for a period of Six (6) months from the date of these directions in order to facilitate the SLCs to overcome the outbreak of COVID 19.
(Signature)
J P Gamalath Acting Director, Department of Supervision of Non-Bank Financial Institutions, Central Bank of Sri Lanka